ARTICLE 1
PERSONS COVERED
This
Convention shall apply to persons
who are residents of one or both of
the Contracting States.
ARTICLE 2
TAXES COVERED
1. This Convention shall
apply to taxes on income imposed on
behalf of a Contracting State or on
its political sub-divisions,
irrespective of the manner in which
they are levied.
2. There shall be
regarded as taxes on income, all
taxes imposed on total income or on
elements of income including taxes
on gains from alienation of movable
or immovable property, taxes on the
total amounts of wages or salaries
paid by enterprises.
3.
The existing taxes to which the
Convention shall apply are:-
(a)
In the case of Pakistan :
(i)
the income tax ;
(ii)
the super tax ; and
(iii)
the surcharge ;
(
hereinafter referred to as “
Pakistan tax ” ) ;
(b)
in the case of Jordan :
(i)
the income tax ;
(ii) the distribution tax;
and
(iii) the
social service tax;
( hereinafter referred to as “
Jordanian tax” ).
4. The Convention shall
apply also to any identical or
substantially similar taxes which
are imposed by either Contracting
State after the date of signature of
the Convention in addition to, or in
place of, the existing taxes. The
competent authorities of the
Contracting States shall notify each
other of significant changes which
have been made in their respective
taxation laws.
ARTICLE 3
GENERAL DEFINITIONS
1.
For the purposes of this
Convention, unless the context
otherwise requires:
(a)
The term “Pakistan” when used in a
geographical sense means Pakistan as
defined in the constitution of the
Islamic Republic of Pakistan and
includes any area outside the
territorial waters of Pakistan which
under the laws of Pakistan and
international law is an area within
which Pakistan exercises sovereign
rights and exclusive jurisdiction
with respect to the natural
resources of the seabed, subsoil and
superjacent waters;
(b) The term “Jordan” means
the territory of the Hashemite
Kingdom of Jordan, the territorial
waters of Jordan and the seabed and
subsoil of the territorial waters,
and includes any area extending
beyond the limits of the territorial
waters of Jordan, and the seabed and
subsoil of any such area, which has
been or may hereafter be designated,
under the laws of Jordan and in
accordance with international law,
and in which Jordan has sovereign
rights for the purposes of exploring
and exploiting the natural
resources, whether living or
non-living;
(c) The terms “Contracting
State” and the “other Contracting
State” mean Pakistan or Jordan, as
the context requires;
(d)
The term “company” means any body
corporate or any entity constituted
or recognized under the laws of one
or other of the Contracting States
or which is treated as a company or
body corporate for tax purposes;
(e) The term “competent
authority” means:
(i)
In Pakistan the Central Board of
Revenue or its authorized
representatives; and
(ii) In Jordan the
Minister of Finance or his
authorized representative;
(f)
The terms “enterprise of a
Contracting State” and “enterprise
of the other Contracting State” mean
respectively an enterprise carried
on by a resident of a Contracting
State and an enterprise carried on
by a resident of the other
Contracting State;
(g)
The term “international traffic”
means any transport by a ship or
aircraft operated by an enterprise
of a Contracting State, except when
the ship or aircraft is operated
solely between places in the other
Contracting State;
(h)
The term “national”
means;
(a)
any individual possessing the
citizenship or nationality of a
Contracting State;
(b)
any legal person or association or
a partnership deriving its status as
such from the laws in force in a
Contracting State ;
(i) The term “person”
includes an individual, a company
and any other body of persons which
is treated as an entity for tax
purposes; and
(j) The term “tax” means Pakistan tax or Jordanian tax, as
the context requires.
2. As regards the
application of the provisions of the
Convention at any time by a
Contracting State, any term not
defined therein shall, unless the
context otherwise requires, have the
meaning which it has at that time
under the law of that State for the
purposes of the taxes to which the
Convention applies, any meaning
under the applicable tax laws of
that State prevailing over a meaning
given to the term under other laws
of that State.
ARTICLE 4
RESIDENT
1. For the purposes
of this Convention, the term
“resident of a Contracting State”
means:
any person who, under
the laws of a Contracting State is
liable to tax therein by reason of
his domicile, residence, place of
management or any other criterion of
a similar nature, but this term does
not include any person who is liable
to tax in a Contracting State in
respect only of income from sources
therein.
2. Where by reason
of the provisions of paragraph 1 an
individual is a resident of both
Contracting States, then his status
shall be determined as follows:
(a)
he shall be deemed to be a resident
only of the State in which he has a
permanent home available to him, if
he has a permanent home available to
him in both States, he shall be
deemed to be a resident only of the
State with which his personal and
economic relations are closer
(“center of vital interests”);
(b)
if the State in which he has his
center of vital interests cannot be
determined, or if he does not have a
permanent home available to him in
either State, he shall be deemed to
be a resident only of the State in
which he has an habitual abode;
(c)
if he has an habitual abode in both
States or in neither of them, he
shall be deemed to be a resident
only of the State of which he is a
national; and
(d) if he is a national of
both States or of neither of them,
the competent authorities of the
Contracting States shall settle the
question by mutual agreement.
3. Where, by reason
of the provisions of paragraph 1, a
person, other than an individual,
is a resident of both Contracting
States then it shall be deemed to be
a resident only of the State in
which its place of effective
management is situated .
ARTICLE 5
PERMANENT ESTABLISHMENT
1. For the purposes
of this Convention, the term
“permanent establishment” means a
fixed place of business through
which the business of an enterprise
is wholly or partly carried on.
2. The term “permanent establishment” includes especially:
(a)
a place of management ;
(b)
a branch ;
(c)
an office ;
(d)
a factory ;
(e)
a workshop ;
(f)
a warehouse ;
(g)
a sales outlet ;
(h)
a mine, an oil or gas
well, a quarry or any other place of
extraction or exploitation of
natural resources and a drilling rig
installed or a working ship used for
exploration of natural
resources;
(i)
a refinery; and
(j) a farm
or plantation.
3. The term “permanent
establishment” likewise encompasses:
(a) a building site, a
construction, assembly or
installation project or any
supervisory activity in connection
with such site or project, but only
where such site, project or activity
continues for a period of more than
six months; or
(b)
the furnishing of services,
including consultancy services, by
an enterprise through employees or
other personnel engaged by the
enterprise for such purpose, but
only where activities of that nature
continue (for the same or a
connected project) within the
country for a period or periods
aggregating more than three months
within any twelve-month period.
4.
Notwithstanding the preceding
provisions of this Article, the term
“permanent establishment” shall be
deemed not to include:
(a) the use of facilities
solely for the purpose of storage,
or display of goods or merchandise
belonging to the enterprise;
(b) the maintenance of stock
of goods or merchandise belonging to
the enterprise solely for the
purpose of storage, or display;
(c) the maintenance of a stock
of goods or merchandise belonging to
the enterprise solely for the
purpose of processing by another
enterprise;
(d) the maintenance of a fixed
place of business solely for the
purpose of purchasing goods or
merchandise, or for collecting
information, for the enterprise;
(e) the maintenance of a fixed
place of business solely for the
purpose of carrying on, for the
enterprise, any other activity of a
preparatory or auxiliary character;
and
(f)
the maintenance of a fixed place of
business solely for any combination
of activities mentioned in
subparagraphs (a) to (e), provided
that the overall activity of the
fixed place of business resulting
from this combination is of a
preparatory or auxiliary character.
Provided further that where any of
the above activities is materially
assisting in carrying out of the
core activities of the enterprise or
is conducted along with such core
activities from the same place of
business or where such activities
exceed the above provisions, shall
be deemed to constitute permanent
establishment for the enterprise.
5. Notwithstanding the
provisions of paragraphs 1 and 2,
where a person other than an agent
of an independent status to whom
paragraph 6 applies - is acting in a
Contracting State for or on behalf
of an enterprise of the other
Contracting State, that enterprise
shall be deemed to have a permanent
establishment in the first
mentioned State in respect of any
activities which that person
undertakes for the enterprise, if
such a person:
(a) has
and habitually exercises in that
State an authority to conclude
contracts in the name of the
enterprise, unless the activities of
such person are limited to those
mentioned in paragraph 4 which, if
exercised through a fixed place of
business, would not make this fixed
place of business a permanent
establishment under the provisions
of that paragraph; or
(b)
manufactures or processes in that
State for the enterprise goods or
merchandise belonging to the
enterprise.
6. An enterprise shall
not be deemed to have a permanent
establishment in a Contracting State
merely because it carries on
business in that State through a
broker, general commission agent or
any other agent of an independent
status provided that such person is
acting in the ordinary course of his
business.
7. The fact that a
company which is a resident of a
Contracting State controls or is
controlled by a company which is a
resident of the other Contracting
State, or which carries on business
in that other State (whether through
a permanent establishment or
otherwise), shall not by itself
constitute either company a
permanent establishment of the
other.
ARTICLE 6
INCOME FROM IMMOVABLE
PROPERTY
1. Income derived by
a resident of a Contracting State
from immovable property, including
income from agriculture or forestry,
situated in the other Contracting
State may be taxed in that other
State.
2. The term “immovable
property” shall have the meaning
which it has under the law of the
Contracting State in which the
property in question is situated.
The term shall in any case include
property accessory to immovable
property, livestock and equipment
used in agriculture and forestry,
rights to which the provisions of
the general law respecting landed
property apply, usufructs of
immovable property and rights to
variable or fixed payments as
consideration for the working of or
the right to work, mineral deposits,
sources and other natural resources.
Ships, boats and aircraft shall not
be regarded as immovable property.
3. The provisions of
paragraph 1 shall apply to income
derived from the direct use, letting
or use in any other form of
immovable property.
4. The provisions of
paragraphs 1 and 3 shall also apply
to the income from immovable
property of an enterprise and to
income from immovable property used
for the performance of independent
personal services.
ARTICLE 7
BUSINESS PROFITS
1. The profits of an
enterprise of a Contracting State
shall be taxable only in that State
unless the enterprise carries on
business in the other Contracting
State through a permanent
establishment situated therein. If
the enterprise carries on business
as aforesaid, the profits of the
enterprise may be taxed in the other
State but only so much of them as is
attributable to:
(a)
that permanent
establishment;
(b)
sales in that other State of goods
or merchandise of the same or
similar kind as those sold through
that permanent establishment; or
(c)
other business activities carried on
in that other State of the same or
similar kind as those effected
through that permanent
establishment.
2. Subject to the
provisions of paragraph 3, where an
enterprise of a Contracting State
carries on business in the other
Contracting State through a
permanent establishment situated
therein, there shall in each
Contracting State be attributed to
that permanent establishment the
profits which it might be expected
to make if it were a distinct and
separate enterprise engaged in the
same or similar activities under the
same or similar conditions and
dealing wholly independently with
the enterprise of which it is a
permanent establishment .
3. In the determination
of the profits of a permanent
establishment, there shall be
allowed as deductions expenses which
are incurred for the purposes of the
business of the permanent
establishment, including executive
and general administrative expenses
so incurred, whether in the State in
which the permanent establishment is
situated or elsewhere. However, no
such deduction shall be allowed in
respect of amounts, if any, paid
(otherwise than towards
reimbursement of actual expenses) by
the permanent establishment to the
head office of the enterprise or any
of its other offices, by way of
royalties, fees or other similar
payments in return for the use of
patents or other rights, or by way
of commission, for specific services
performed or for management or
except in the case of a banking
enterprise, by way of interest on
moneys lent to the permanent
establishment. Likewise, no account
shall be taken in the determination
of the profits of a permanent
establishment, for amounts charged
(otherwise than towards
reimbursement of actual expenses) by
the permanent establishment to the
head office of the enterprise or any
of its other offices, by way of
royalties, fees or other similar
payments in return for the use of
patents or other rights, or by way
of commission for specific services
performed or for management or
except in the case of a banking
enterprise by way of interest on
moneys lent to the head office of
the enterprise or any of its other
offices .
4. Insofar as it has
been customary to a Contracting
State to determine the profits to be
attributed to a permanent
establishment on the basis of any
apportionment of the total profits
of the enterprise to its various
parts, nothing in paragraph 2 shall
preclude that Contracting State from
determining the profits to be taxed
by such an apportionment as may be
customary. The method of
apportionment adopted shall,
however, be such that the result
shall be in a accordance with the
principles contained in this
Article.
5. No profits shall be
attributed to a permanent
establishment by reason of the mere
purchase by that permanent
establishment of goods or
merchandise for the enterprise.
6. For the purposes of
the preceding paragraphs, the
profits to be attributed to the
permanent establishment shall be
determined by the same method year
by year unless there is good and
sufficient reason to the contrary.
7. Where profits include
items of income which are dealt with
separately in other Articles of this
Convention, then the provisions of
those Articles shall not be affected
by the provisions of this Article.
ARTICLE 8
AIR, SHIPPING, ROAD AND RAILWAYS
TRANSPORT
1.
Profits from the operation of
aircraft in international traffic
shall be taxable only in the
Contracting State in which the place
of effective management of the
enterprise is situated.
2. Profits from the
operation of ships in international
traffic may be taxed in the
Contracting State in which the
effective management of the
enterprise is situated. However,
such profits derived from sources
within the other Contracting State
may also be taxed in that other
State in accordance with its
domestic law, provided that the tax
so charged in that other State shall
be reduced by 50 per cent.
3.
If the place of
effective management of a shipping
enterprise or of an inland waterways
transport enterprise is aboard a
ship or boat, then it shall be
deemed to be situated in the
Contracting State in which the home
harbour of the ship or boat is
situated, or if there is no such
home harbour, in the Contracting
State of which the operator of the
ship or boat is a resident.
4. Profits of an
enterprise of a Contracting State
from the operation of railways or
road transport vehicles in
international traffic shall be
taxable in the State in which such
profits arise.
5.
The provisions of
paragraphs 1, 2 and 4 shall also
apply to profits from the
participation in a pool, a joint
business or an international
operating agency.
ARTICLE 9
ASSOCIATED ENTERPRISES
1. Where:
(a)
an enterprise of a Contracting State
participates directly or indirectly
in the management, control or
capital of an enterprise of the
other Contracting State ; or
(b) the same persons
participate directly or indirectly
in the management, control or
capital of an enterprise of a
Contracting State and an enterprise
of the other Contracting State, and
in either case conditions are made
or imposed between the two
enterprises in their commercial
financial relations which differ
from those which would be made
between independent enterprises,
then any profits which would, but
for those conditions, have accrued
to one of the enterprises, but, by
reason of those conditions, have not
so accrued, may be included in the
profits of that enterprise and taxed
accordingly .
2.
Where a Contracting
State includes in the profits of an
enterprise of that State and taxes
accordingly, profits on which an
enterprise of the other Contracting
State has been charged to tax in
that other State and the profits so
included are profits which would
have accrued to the enterprise of
the first-mentioned State if the
conditions made between the two
enterprises had been those which
would have been made between
independent enterprises, then that
other State may make an appropriate
adjustment to the amount of the tax
charged therein on those profits. In
determining such adjustment, due
regard shall be had to the other
provisions of this Convention and
the competent authorities of the
Contracting States shall if
necessary consult each other.
ARTICLE 10
DIVIDENDS
1. Dividends paid by a
company which is a resident of a
Contracting State to a resident of
the other Contracting State may be
taxed in that other State.
2. However, such
dividends may also be taxed in the
Contracting State of which the
company paying the dividends is a
resident and accordingly to the laws
of that State, but if the beneficial
owner of the dividends is a resident
of the other Contracting State, the
tax so charged shall not exceed 10
percent of the gross amount of the
dividend. This paragraph shall not
affect the taxation of the company
in respect of the profits out of
which the dividends are paid.
3. The term “dividends”
as used in this Article means income
from shares, shares or rights,
mining shares, founders shares or
other rights not being debt-claims,
participating in profits, as well as
income treated as distribution by
the taxation laws of the State of
which the company making the
distribution is a resident.
4. The provisions of
paragraphs 1 and 2 shall not apply
if the beneficial owner of the
dividends, being a resident of a
Contracting State, carries on
business in the other Contracting
State of which the company paying
the dividends is a resident, through
a permanent establishment situated
therein, or performs in that other
State independent personal services
from a fixed base situated therein,
and the holding in respect of which
the dividends are paid effectively
connected with such permanent
establishment or fixed base. In such
case, the provisions of Article 7 or
Article 14, as the case may be,
shall apply.
5. Where a company which
is a resident of a Contracting State
derives profits or income from the
other Contracting State, that other
State may not impose any tax on the
dividends paid by the company,
except in so far as such dividends
are paid to a resident of that other
State or in so for as the holding in
respect of which the dividends are
paid is effectively connected with a
permanent establishment or a fixed
base situated in that other State,
nor subject the company’s
undistributed profits to a tax on
undistributed profits, even if the
dividends paid or the undistributed
profits consist wholly or partly of
profits or income arising in such
other State.
ARTICLE 11
INTEREST
1. Interest arising in
a Contracting State and paid to a
resident of the other Contracting
State may be taxed in that other
State.
2. However, such
interest may also be taxed in the
Contracting State in which it arises
and according to the laws of that
State, but if the beneficial owner
of the interest is a resident of the
other Contracting State, the tax so
charged shall not exceed 10 per
cent of the gross amount of the
interest.
3. Notwithstanding the
provisions of paragraph 2, interest
arising from a Contracting State and
paid to the Government or to the
Central Bank of the other
Contracting State, shall be exempt
from tax in the first-mentioned
Contracting State.
4. The term “interest”
as used in this article means income
from debt-claims of every kind,
whether or not secured by mortgage
and whether or not carrying a right
to participate in the debtors
profits, and in particular, income
from government securities and
income from bonds or debentures,
including premiums and prizes
attaching to such securities, bonds
or debentures. Penalty charges for
late payment shall not be regarded
as interest for the purpose of this
Article.
5. The provisions of
paragraphs 1 and 2 shall not apply
if the beneficial owner of the
interest, being a resident of a
Contracting State, carries on
business in the other Contracting
State in which the interest arises,
through a permanent establishment
situated therein, or performs in
that other State independent
personal services from a fixed base
situated therein, and the debt-claim
in respect of which the interest is
paid is effectively connected with
such permanent establishment or
fixed base, or business activities
referred to in subparagraph (c) of
paragraph 1 of Article 7. In such
cases the provisions of Article 7 or
Article 14, as the case may be,
shall apply.
6. Interest shall be
deemed to arise in a Contracting
State when the payer is that State
itself, a political subdivision, a
local authority or a resident of
that State. Where, however, the
person paying the interest, whether
he is a resident of a Contracting
State or not, has in a Contracting
State a permanent establishment or a
fixed base in connection with which
the indebtedness on which the
interest is paid was incurred, and
such interest is borne by such
permanent establishment or a fixed
base, then such interest shall be
deemed to arise in the State in
which the permanent establishment or
a fixed base is situated.
7. Where, by reason of a
special relationship between the
payer and the beneficial owner of
the interest or between both of them
and some other person, the amount of
the interest, having regard to the
debt-claim for which it is paid,
exceeds the amount which would have
been agreed upon by the payer and
the beneficial owner in the absence
of such relationship, the provisions
of this Article shall apply only to
the last-mentioned amount. In such
case, the excess part of the
payments shall remain taxable
according to the laws of each
Contracting State, due regard being
had to the provisions of this
Convention.
ARTICLE 12
ROYALTIES AND FEES FOR
TECHNICAL SERVICES
1. Royalties or fees for
technical services arising in a
Contracting State and paid to a
resident of the other Contracting
State may be taxed in that other
State.
2. However, such
royalties or fees for technical
services may also be taxed in the
Contracting State in which they
arise and according to the laws of
that State, but if the beneficial
owner of the royalties or fees for
technical services is a resident of
the other Contracting State, the tax
so charged shall not exceed 10
percent of the gross amount of the
royalties or fees for technical
services.
3. The term “royalties”
as used in this Article means any
consideration for the use of, or the
right to use, any copyright of
literary, artistic or scientific
work (including cinematograph films
and films, tapes or discs for radio
or television broadcasting), any
patent, trade mark, design or model,
plan, secret formula or process, or
for information concerning
industrial, commercial or scientific
experience.
4. The term “fees for
technical services” as used in this
Article means any consideration
(including any lump sum
consideration) for the provision or
rendering of any managerial,
technical or consultancy services by
a resident of a Contracting State in
the other Contracting State but does
not include consideration for any
activities mentioned in paragraph 3
of Article 5, Article 14 or Article
15.
5. The provisions of
paragraphs 1 and 2 shall not apply
if the beneficial owner of the
royalties or fees for technical
services, being a resident of a
Contracting State, carries on
business in the other Contracting
State in which the royalties or fees
for technical services arise,
through a permanent establishment
situated therein, or performs in
that other State independent
personal services from a fixed base
situated therein, and the right or
property in respect of which the
royalties or fees for technical
services are paid is effectively
connected with such permanent
establishment or fixed base. In such
case, the provisions of Article 7 or
Article 14, as the case may be,
shall apply.
6.
Royalties or fees for
technical services shall be deemed
to arise in a Contracting State when
the payer is a resident of that
State. Where, however, the person
paying the royalties or fees for
technical services, whether he is a
resident of a Contracting State or
not, has in a Contracting State a
permanent establishment or a fixed
base with which the right, property
or contract in respect of which the
royalties or fees for technical
services are paid is effectively
connected, and such royalties or
fees for technical services are
borne by such permanent
establishment of fixed base, then
such royalties or fees for technical
services shall be deemed to arise in
the State in which the permanent
establishment or fixed base is
situated.
7. Where, by reason of a
special relationship between the
payer
and
the beneficial owner or between both
of them and some other person, the
amount of the royalties or fees for
technical services, having regard to
the use, right or information for
which they are paid, exceeds the
amount which would have been agreed
upon by the payer and the beneficial
owner in the absence of such
relationship, the provisions of this
Article shall apply only to the
last-mentioned amount. In such case,
the excess part of the payments
shall remain taxable according to
the laws of each Contracting State,
due regard being had to the other
provisions of this Convention.
ARTICLE 13
CAPITAL GAINS
1.
Gains derived by a
resident of a Contracting State from
the alienation of immovable property
referred to in Article 6 and
situated in the other Contracting
State may be taxed in that other
State.
2. Gains from the
alienation of movable property
forming part of the business
property of a permanent
establishment which an enterprise of
a Contracting State has in the other
Contracting State or of movable
property pertaining to a fixed base
available to a resident of a
Contracting State in the other
Contracting State for the purpose of
performing independent personal
services, including such gains from
the alienation of such a permanent
establishment (alone or with the
whole enterprise) or of such fixed
base, may be taxed in that other
State.
3.
Gains of an enterprise of
a Contracting State from the
alienation of ships or aircraft
operated in international traffic or
movable property pertaining to the
operation of such ships or aircraft
shall be taxable only in that
State.
4.
Gains from the alienation
of any property other than that
referred to in paragraphs 1, 2 and
3, shall be taxable only in the
Contracting State where the gains
arise.
ARTICLE 14
INDEPENDENT PERSONAL SERVICES
1. Income derived by an
individual who is a resident of a
Contracting State in respect of
professional services, or other
activities of an independent
character shall be taxable only in
that State unless:
(a)
he has a fixed base regularly
available to him in the other
Contracting State for the purpose of
performing his activities. If he
has such a fixed base, the income
may be taxed in the other State but
only so much of it as is
attributable to that fixed base. For
the purposes of this Convention,
where an individual who is a
resident of a Contracting State is
present in the other Contracting
State for a period or periods
exceeding in aggregate 183 days in
any twelve-month period commencing
or ending in the fiscal year
concerned, he shall be deemed to
have a fixed base regularly
available to him in that other State
and the income that is derived from
his activities that are performed in
that other State shall be
attributable to that fixed base;
(b)
the remuneration for his activities
in the other Contracting State is
paid by a resident of that
Contracting State or is borne by a
permanent establishment or a fixed
base situated in that Contracting
State and exceeds one thousand and
five hundred U.S Dollars in the
fiscal year.
2. The term
“professional services” includes
especially independent scientific,
literary, artistic, educational or
teaching activities as well as the
independent activities of
physicians, lawyers, engineers,
architects, dentists and
accountants.
ARTICLE 15
DEPENDENT PERSONAL SERVICES
1. Subject to the
provisions of Articles 16, 18, and
19, salaries, wages and other
similar remuneration derived by a
resident of a Contracting State in
respect of an employment shall be
taxable in that Contracting State
unless the employment is exercised
in the other Contracting State. If
the employment is so exercised, such
remuneration as is derived therefrom
may be taxed in that other State.
2. Notwithstanding the
provisions of paragraph 1,
remuneration derived by a resident
of a Contracting State in respect of
an employment exercised in the other
Contracting State shall be taxable
only in the first-mentioned State
if:
(a) the recipient is
present in the other State for a
period or periods not exceeding in
aggregate 183 days in any
twelve-month period commencing or
ending in the fiscal year concerned;
(b) the remuneration is
paid by or on behalf of an employer
who is not a resident of the other
State; and
(c) the remuneration is
not borne by a permanent
establishment or a fixed base which
the employer has in the other State.
ARTICLE 16
DIRECTORS’ FEES
1. Directors’ fees and
similar payments derived by a
resident of a Contracting State in
his capacity as a member of the
board of directors of a company
which is a resident of the other
Contracting State may be taxed in
that other Contracting State.
2. Salaries, wages and
other similar remuneration derived
by a resident of a Contracting State
in his capacity as an official in a
top-level managerial position of a
company which is a resident of the
other Contracting State may be taxed
in that other State.
ARTICLE 17
ENTERTAINERS AND SPORTSPERSONS
1. Notwithstanding the
provisions of Articles 7, 14 and 15,
income derived by a resident of a
Contracting State as an entertainer,
such as a theatre, motion picture,
radio or television artiste, or a
musician, or as sportsperson, from
his personal activities as such
exercised in the other Contracting
State, may be taxed in that other
State.
2. Where income in
respect of personal activities
exercised by an entertainer or a
sportsperson in his capacity as such
accrues not to the entertainer or
sportsperson himself but to another
person, that income may,
notwithstanding, the provisions of
Articles 7, 14 and 15, be taxed in
the Contracting State in which the
activities of the entertainer or
sportsperson are exercised.
3. Income derived by a
resident of a Contracting State from
activities exercised in the other
Contracting State as envisaged in
paragraphs 1 and 2 of this Article,
shall be exempt from tax in that
other state if the visit to that
other State is supported wholly or
mainly by public funds of the first
mentioned Contracting State, a
political subdivision or a local
authority thereof, or takes place
under cultural agreement or
arrangement between the Governments
of the Contracting States.
ARTICLE
18
PENSIONS AND ANNUITIES
1. Subject to the
provisions of paragraph 2 of Article
19, pensions and other similar
remuneration and annuities arising
in a Contracting State and paid to a
resident of the other Contracting
State, shall be taxable in the
first-mentioned State.
2. Notwithstanding the
provisions of paragraph 1, pensions
and other similar payments made
under the social security system of
a Contracting State or a political
sub-division or a local authority
thereof shall be taxable only in
that state.
3. The term “annuity”
means a stated sum payable
periodically at stated times during
life or during a specified or
ascertainable period of time under
an obligation to make the payments
in return for adequate and full
consideration in money or money’s
worth.
ARTICLE 19
GOVERNMENT SERVICE
1. (a)
Salaries, wages and similar
remuneration, other than a pension,
paid by a Contracting State or a
political subdivision or a local
authority thereof to an individual
in respect of services rendered to
that State or subdivision or
authority shall be taxable only in
that State.
(b)
However, such salaries, wages and
similar remuneration shall be
taxable only in the other
Contracting State if the services
are rendered in that State and the
individual is a resident of that
State who:
(i)
is a national of that State; or
(ii) did not become a
resident of that State solely for
the purpose of rendering the
services.
2. (a) Any
pension paid by, or out of funds
created by, a Contracting State or a
political subdivision or a local
authority thereof to an individual
in respect of services rendered to
that State or subdivision or
authority shall be taxable only in
that State.
(b)
However, such pension shall be
taxable only in the other
Contracting State if the individual
is a resident of, and a national of
, that State.
3. The provisions of
Articles 15, 16, 17 and 18 shall
apply to salaries, wages and similar
remuneration, and to pensions in
respect of services rendered in
connection with a business carried
on by a Contracting State or a
political subdivision or a local
authority thereof.
ARTICLE 20
STUDENTS, APPRENTICES AND BUSINESS
TRAINEES
A student,
apprentice or trainee who is present
in a Contracting State solely for
the purpose of his education or
training and who is, or immediately
before being so present, was a
resident of the other Contracting
state, shall be exempt from tax in
the first mentioned State in respect
of a stipend or scholarship received
in that State and any payments
received from outside that first
mentioned State for the purposes of
his maintenance, education or
training.
ARTICLE 21
OTHER INCOME
1. Items of income of a
resident of a Contracting State,
wherever arising, not dealt with in
the foregoing Articles of this
Convention shall be taxable in that
State.
2. The provisions of
paragraph 1 shall not apply to
income, other than income from
immovable property as defined in
paragraph 2 of Article 6, if the
recipient of such income being a
resident of a Contracting State,
carries on business in the
Contracting State through a
permanent establishment situated
therein, or performs in that other
State independent personal services
from a fixed base situated therein,
and the right or property in respect
of which the income is paid is
effectively connected with such
permanent establishment or fixed
base. In such case the provisions
of Article 7 or Article 14, as the
case may be, shall apply.
3. Notwithstanding the
provisions of paragraphs 1 and 2,
items of income of a resident of a
Contracting State not dealt with in
the foregoing Articles of the
Convention and arising in the other
Contracting State may also be taxed
in that other State.
ARTICLE 22
METHODS FOR THE ELIMINATION OF
DOUBLE TAXATION
1. Double taxation shall
be eliminated by the Contracting
States, as follows:
(a)
In Pakistan, where a resident of a
Contracting State derives income
with the provisions of this
Convention, may be taxed in Jordan,
Pakistan shall allow as a deduction
from tax on the income of that
resident, an amount equal to
Jordanian tax paid. Such deduction
shall not, however, exceed that part
of the tax on income, as computed
before the deduction is given, which
is attributable to the income which
may be taxed in the Hashemite
Kingdom of Jordan;
(b) In Jordan, where a resident
of a Contracting State derives
income with the provisions of this
Convention, may be taxed in
Pakistan, Jordan shall allow as a
deduction from tax on the income of
that resident, an amount equal to
Pakistan tax paid. Such deduction
shall not, however, exceed that part
of the tax on income, as computed
before the deduction is given, which
is attributable to the income which
may be taxed in the Islamic Republic
of Pakistan.
2. For the purposes of
paragraph 1 of this Article, the
term “Pakistan tax paid” and
“Jordanian tax paid” shall be deemed
to include the amount of tax which
would have been paid in Pakistan or
Jordan, as the case may be, but for
an exemption or reduction granted in
accordance with laws designed to
promote economic development in that
Contracting State.
3. A grant given by a
Contracting State or a political
subdivision thereof to a resident of
the other Contracting State in
accordance with laws designed to
promote economic development in that
first-mentioned State, shall not be
taxable in the other State.
ARTICLE 23
NON-DISCRIMINATION
1. Nationals of a
Contracting State shall not be
subjected in the other Contracting
State to any taxation or any
requirement connected therewith
which is different or more
burdensome than the taxation and
connected requirements to which
nationals of that other State in the
same circumstances, in particular
with respect to residence, are or
may be subjected. This provision
shall, notwithstanding the
provisions of Article 1, also apply
to persons who are not residents of
one of both or the Contracting
States.
2. The taxation on a
permanent establishment which an
enterprise of a C